Allcargo Logistics Ltd

To The Members of Allcargo Global Logistics Limited

1. We have audited the attached Balance Sheet of Allcargo Global Logistics Limitedas at December 31, 2010 and also the Profit and Loss Account and the Cash Flow Statementof the Company for the year ended on that date, both annexed thereto. These financialstatements are the responsibility of the Company's management. Our responsibility is toexpress an opinion on these financial statements based on our audit.

2. We have conducted our audit in accordance with auditing standards generally acceptedin India. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatements. Anaudit includes examining, on a test basis, evidence supporting the amounts and disclosuresin the financial statements. An audit also includes assessing the accounting principlesused and significant estimates made by management as well as evaluation of the overallfinancial statement presentation. We believe that our audit provides a reasonable basisfor our opinion.

3. As required by the Companies (Auditors' Report) Order, 2003 ('the Order'), asamended, issued by the Central Government of India in terms of sub-section (4A) of Section227 of the Companies Act, 1956 ('the Act'), we give in the Annexure, a statement on thematters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the annexure referred to in paragraph 3 above, we reportthat:

i. We have obtained all the information and explanations, which to the best of ourknowledge and belief were necessary for the purpose of the audit;

ii. In our opinion, proper books of account as required by law have been kept by theCompany so far as appears from our examination of those books;

iii. The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with bythis report are in agreement with the books of account;

iv. In our opinion the Balance Sheet, Profit and Loss Account and Cash Flow Statement,dealt with by this report, comply with the Accounting Standards referred to in theCompanies (Accounting Standard) Rules, 2006, issued by Central Government, read togetherwith sub-section (3C) of Section 211 of the Companies Act, 1956;

v. In our opinion and to the best of our information and according to the explanationsgiven to us, the said financial statements together with the notes thereon and attachedthereto, give in the prescribed manner, the information required by the Companies Act,1956 and give a true and fair view in conformity with the accounting principles generallyaccepted in India :

a. in the case of the balance sheet, of the state of affairs of the Company as atDecember 31, 2010;

b. in the case of the profit and loss account, of the profit for the year ended on thatdate; and

c. in the case of the cash flow statement, of the cash flows for the year ended on thatdate.

5. On the basis of written representations received from the directors and taken onrecord by the Board of Directors, we report that none of the Directors is disqualified ason December 31, 2010 from being appointed as a director in terms of clause (g) ofsub-section (1) of Section 274 of the Companies Act, 1956.

ANNEXURE TO THE AUDITORS' REPORT

i) a. The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

b. All the assets have not been physically verified by the management during the yearbut there is a regular programme of verification, which in our opinion is reasonablehaving regard to the size of the Company and the nature of its assets. No materialdiscrepancies were noticed on such verification.

c. Fixed Assets disposed off during the year were not substantial and therefore do notaffect the going concern assumption.

ii) a. Inventory has been physically verified by the management during the year. In ouropinion, the frequency of verification is reasonable.

b. The procedures of physical verification of inventory followed by the management arereasonable and adequate in relation to the size of the Company and the nature of itsbusiness.

c. The Company is maintaining proper records of inventories and no materialdiscrepancies were noticed on physical verification.

iii) According to the information and explanations given to us, the Company has neithergranted nor taken any loans secured or unsecured, to or from companies, firms or otherparties covered in the register maintained under Section 301 of the Companies Act, 1956.Accordingly provisions of clause (iii) b, (iii) c, (iii) d, (iii) f and (iii) g of theOrder are not applicable..

iv) In our opinion and according to the information and explanations given to us, thereare adequate internal control procedures commensurate with the size of the Company and thenature of its business with regard to purchase of fixed assets and with regard to sale ofgoods and supply of services. During the course of the audit, we have not observed anycontinuing failure to correct major weaknesses in internal controls.

v) a. According to the information and explanations given to us, we are of the opinionthat the transactions that need to be entered into the register maintained under Section301 of the Companies Act, 1956 have been so entered.

b. In our opinion and according to the information and explanations given to us, thetransactions made in pursuance of contracts or arrangements entered in the registermaintained under Section 301 of the Companies Act, 1956 and exceeding the value of rupeesfive lakhs in respect of any party during the year have been made at prices which arereasonable having regard to prevailing market prices at the relevant time.

vi) As the Company has not accepted any deposits from the public, paragraph 4 (vi) ofthe Order is not applicable.

vii) In our opinion, the Company has an internal audit system commensurate with thesize and nature of its business.

viii) To the best of our knowledge and as explained, the Central Government has notprescribed maintenance of cost records under clause (d) of sub-section (1) of Section 209of the Companies Act, 1956 for the products of the Company.

ix) a. According to the records examined by us, the Company is generally regular indepositing undisputed statutory dues including Provident Fund, Investor Education andProtection Fund, Employee's State Insurance, Income-tax, Wealth tax, Sales tax, Servicetax, Customs duty, Excise duty, Cess and other material statutory dues applicable to itwith the appropriate authorities.

b. According to the information and explanation given to us, and the records examinedby us, there are no dues of Income tax, Sales tax, Customs duty, Wealth tax, Excise duty,Service tax or Cess which have not been deposited on account of any dispute, other thanthose stated hereunder:

x) The Company does not have accumulated losses as at the end of the year and theCompany has not incurred cash losses during the current and the immediately precedingfinancial year.

xi) In our opinion and according to the information and explanations given to us, theCompany has not defaulted in repayment of dues to a financial institution, bank ordebenture holders.

xii) As the Company has not granted any loans and advances on the basis of security byway of pledge of shares, debentures and other securities, paragraph 4 (xii) of the Orderis not applicable.

xiii) As the Company is not a chit fund/nidhi/mutual benefit fund/society to which theprovisions of special statute relating to chit fund are applicable, paragraph 4(xiii) ofthe Order is not applicable.

xiv) In our opinion, the Company has maintained proper records of the transactions andcontracts in respect of investments purchased and sold during the year and timely entrieshave been made therein. The investments made by the Company are held in its own nameexcept investments of Rs 4,500 thousand and Rs 191,317 thousand continued to be held inthe name of demerged entity and merged entity respectively.

xv) In our opinion, the terms and conditions on which the Company has given guaranteesfor loans taken by others from banks or financial institutions are not prejudicial to theinterest of the Company.

xvi) In our opinion, the term loans have been applied for the purpose for which theywere raised.

xvii) According to the information and explanations given to us and on an overallexamination of the balance sheet and cash flows of the Company, we report that fundsraised on short-term basis have not been used for long-term investment. No long-term fundshave been used to finance short-term assets except permanent working capital.

xviii) The Company has not made preferential allotment of shares to parties covered inthe register maintained under section 301 of the Companies Act, 1956.

xix) The Company did not have any outstanding debentures during the year. Accordingly,paragraph 4 (xix) of the Order is not applicable.

xx) The Company has not raised any money through a public issue during the year.

xxi) Based upon the audit procedures performed and information and explanations givenby the management, we report that no fraud on or by the Company has been noticed orreported during the course of our audit for the year ended December 31, 2010.